New Construction Starbucks/Sonic Drive-In

Property Overview

Located at the intersection of Kent-Kangley Road (SR 516) and 116th Avenue SE in Kent, Washington, this new construction retail property houses two single-tenant buildings on a shared parcel: a Starbucks and a Sonic Drive-In. The 2,576 SF asset was completed in 2018 and was 100% occupied at the time of sale, with both tenants operating under long-term triple net leases.

Challenge

Our team was engaged by the developer to sell a two-building, new construction retail property structured as a portfolio on a single parcel. The asset was brought to market while both tenants were in the final stages of opening, requiring us to generate buyer confidence in a property where operations had not yet fully commenced. The transaction also needed to satisfy a 1031 exchange requirement on the buyer's side, adding a timeline and qualification dimension to the deal.

Action

We marketed the property to investors seeking stable, long-term net-leased retail assets. The offering was positioned around the strength of both tenant covenants and lease structures: Starbucks, an investment-grade credit tenant, signed a 10-year NNN lease with four 5-year options, while the Sonic Drive-In operator, a franchisee with nine locations in Washington, signed a 20-year NNN lease with five 5-year options. Both leases include 10% rent increases every five years. We highlighted the site's traffic exposure, with more than 34,000 vehicles per day at the intersection, and the minimal landlord obligations under the triple net structure, including a transferable new roof warranty.

Result

• Sold the property for $4,500,000, or $1,747 per SF
• Achieved 100% occupancy at close with both tenants under long-term NNN leases
• Successfully facilitated the buyer's 1031 exchange requirement
• Represented the seller on the disposition of a two-building portfolio structured on a single parcel